Changes in regulation in 2022 spells change for orphan drugs
Orphan Medical Products (OMPs) offer uniquely important treatments, but for one reason or another, are unlikely to recoup the expense of their development. Regulation has sought to ensure the benefits of these OMPs are not lost, and that they can still be made available. However, this has not always had the desired effect.
Patients with rare diseases have the same rights to care as any other patient. Orphan Drug acts emerged to stimulate research and development of orphan drugs.
Orphan Regulation 141/2000 was formulated to help stimulate the research and development of medicines that treat rare diseases. However, a number of shortcomings have been noted. Some 95% of rare diseases still have no treatment options, there is a lack of consistency in accessibility and availability across the EU, and there are still few inadequate measures to help adopt scientific and technological developments for less common diseases.
The development of a new drug takes upwards of 10 years on average. It is expensive, and the outcome is uncertain. Only one in ten may have a therapeutic effect. Often, developing a drug intended to treat a rare disease does not allow the recovery of the capital invested for its research.
Orphan drugs typically are not developed for economic reasons but represent a response to a clear public health need. This may include products intended to treat very rare diseases, - maybe less than one person per 2,000 in Europe. There are between 4,000 and 5,000 rare diseases world-wide affecting up to 30 million people in Europe.
OMPs include products already withdrawn for economic or therapeutic reasons and products that have been identified, but not yet developed. These may have been derived from a research process that cannot be patented, or they might concern important, but not creditworthy markets such as in Third-World countries.
Brexit and COVID-19 have made an impact, compounding existing issues such as high drug pricing and patient access. This has led to the publication of the EU Pharmaceuticals Strategy in 2020/1 which aims to future-proof the regulatory system.
Almost every aspect of pharmaceutical regulation is now under review across Europe with significant changes expected in December 2022. Key aspects of how pharmaceuticals are regulated in the EU could be affected, from costing and reimbursement to intellectual property rights, incentives and more.
What are the key areas of potential legislative change for OMPs?
The EU Commission is looking at how we can direct investment to areas of high unmet need. There may be a differentiation in incentives for drug development in the orphan and unmet medical need areas.
Companies may be required to obtain and maintain their IP rights based conditions – such as launching in all EU Member States, not just the big five – UK, Germany, France, Italy and Spain) and fully transparent R&D expenditure. Both these conditions add risk, particularly for orphan medicinal products.
Although bigger markets may imply larger returns, launching everywhere may include countries with limited funding for these products. Transparent reporting of R&D could reveal confidential trade secrets.
The OMP market is currently growing at twice the rate of the non-orphan market.
Two recent economic studies show the potential impact of removing or limiting the incentives for OMPs - the UK’s Office of Health Economics (OHE) and the European Federation of Pharmaceutical Industry Associations (EFPIA) published by Dolon.
The OHE report found that the existing Orphan Drug Regulation, which provides research grants and protocol assistance to promote innovation and market exclusivity to heighten potential economic returns, has successfully incentivised companies to invest in the development of OMPs.
The Dolon report found that over half (74) of the 142 OMPs developed between 2000 and 2017 would not have been economically viable in the absence of the existing regulation.
Both reports caution against reducing the protections for OMPs in Orphan Drug Regulation.
Reducing market exclusivity
There is talk of the new regulation reducing the market exclusivity for new indications. This would hypothetically give exclusivity only to OMPs that address unmet needs. This could change how much companies are willing to invest in that orphan space.
Some Member States claim that the reimbursement of a drug should not be linked to the value of the product or even the cost of the product, but the cost of the replacement product. This could add to the risk for drug developers.
This is the biggest change to EU law since 1965 with a great many basic concepts up for re-evaluation. Some elements may only have an effect in several years’ time, but thigns like the changes to the conditionality of IP rights or the obligation to disclose R&D costs are likely to have a more immediate impact.
Changes to the EU’s Pharmaceutical Legislation are intended to support patient access, encourage innovations that could tackle unmet medical need, and settling drug pricing. But whether this has a net positive or negative effect in the longer term might depend on what segment of the market you look at.
At this stage, it is important for industry stakeholders to work together to make sure the resulting legislation is coherent and beneficial. If not, they will have to wait a long time for another opportunity.